Skeletal morbidity, including arthritis, osteoporosis and injury, represent the second most costly category of diseases in North America (>$160 billion/yr). The treatment of cartilage and bone diseases has challenged orthopedic surgeons for centuries due to the apparent inability of cartilage and bone to repair or regenerate. Whereas drug treatments and physical therapies can help alleviate symptoms, they are not a cure. Recently, the transplantation of cells alone or tissue engineered cells on matrices have emerged as new alternatives for promoting the repair and regeneration of the skeleton. Embryonic stem (ES) cells are particularly promising for transplant therapy as they readily proliferate, are self-renewing, and can be driven to differentiate into a variety of cell types. These attributes are prerequisite to supply adequate numbers of functional cartilage and bone cells for tissue engineering. Recently, our labs have developed methods to differentiate mouse ES cells into osteoblasts and chondrocytes in culture, have begun to expand these cells in bioreactors, and to transplant these cells in vivo into mouse models of skeletal injury. As a first step towards the goal of generating functional bone and cartilage tissue for clinical applications, we propose to develop and validate a model system for the large-scale expansion, differentiation, and transplantation of ES cells into mice. The expansion of ES cells is necessary due to the scarce supply of ES cells, and the fact that fully differentiated chondrocytes and osteoblasts cannot be effectively expanded ip culture. ES cells will be: (1) expanded, (2) differentiated into osteoblasts and chondrocytes, (3) purified, (4) combined with a material scaffolds to generate functional tissue, (5) transplanted into an animal injury model, and (6) evaluated using novel non-invasive imaging techniques and validated by conventional histopathology. [unreadable] [unreadable] [unreadable]